In Tillman v. Navient Sols., LLC, No. 18-CV-04625 (N.D. Ill. June 15, 2020), the Northern District of Illinois dismissed a claim under the Fair Credit Reporting Act (FCRA) based upon student loans that had been reported as being in default but that the plaintiff asserted had been discharged.
The plaintiff, Tillman, took out a series of student loans while attending college, including a federal Perkins loan and seven Stafford loans under the Federal Family Education Loan Program. The Perkins loan was canceled in 2007 based on Tillman’s post-graduation employment as a teacher. But the Stafford loans were not similarly canceled. Rather, these loans were consolidated in 2006. Tillman defaulted on the consolidated loan in April of 2016.
In his suit, Tillman alleged the 2006 promissory note consolidating the Stafford loans was forged rendering the loan invalid and, even if the loan was valid, it should have been forgiven. Based on this he asserted FCRA claims against the loan servicer, Navient Solutions, LLC (Navient); the guaranty agency on the loan, United Student Aid Funds (USA Funds); and three major consumer reporting agencies (CRAs) alleging that 2016 default should not have been included on his credit report.
Tillman disputed the reporting of the student loans with the CRAs in September 2017 and again in 2018. He asserted that because the loans were forgiven and the consolidation was premised on a fraudulent promissory note, the CRAs were required to remove the negative reporting. In rejecting these claims, the Court found Tillman failed to allege any facts to suggest that the CRAs did not fulfill their duty to provide factually accurate reports or to conduct reasonable reinvestigations. Rather, the CRAs obtained confirmation from the lender indicating that the loan was in default and being reported accurately.
Moreover, based on the Seventh Circuit’s recent decision in Denan v. Trans Union LLC, 959 F.3d 290, 296 (7th Cir. 2020), the Court held CRAs cannot be held liable for the inclusion on a credit report of a loan that is disputed on legal grounds. Because the information reported cannot be deemed to be inaccurate until a court has found the loan to be invalid, Tillman’s FCRA claim failed as a matter of law.
With regard to Tillman’s claims against Navient and USA Funds, the court noted furnishers of information can only be held liable if, after receiving notice of a dispute from a CRA, they failed to conduct a reasonable investigation. But the documents submitted by Tillman with his Complaint show Navient investigated Tillman’s claims on at least two occasions and provided him with the results of those investigations. Because Tillman did not allege anything to suggest the investigations were unreasonable, the Court dismissed his claims.
The Tillman decision reinforces several important principles applicable to FCRA claims. A CRA cannot be held liable for reporting information merely because the plaintiff disputes the underlying loan on legal grounds. And if a plaintiff cannot allege facts to show that a furnisher of information failed to conduct a reasonable investigation after receiving notice of a dispute from a CRA, a claim alleging violations of Section 1681s-2(b) fails as a matter of law.